Эпизоды
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This episode of The Trajectory Africa features Yele Oyekola, Co-founder and CEO of Duplo, a company on a mission to streamline financial operations for African businesses. We’re diving deep into the world of digitizing financial operations, from payables and expense management to reconciliation and reporting.
Africa’s $1.5T B2B payments market represents a massive opportunity in a space that’s ripe for innovation—think medium to large businesses in industries like FMCG, logistics and manufacturing. These companies have a lot of challenges like managing manual operations to navigating payment terms.
But it’s not just about payments— it’s really about the unsexy business of digitizing financial operations. Digitizing payments bleeds into tackling financial operations as a whole—payments in the front, financial operations in the back. (Huge thanks to Gwera Kiwana for being first to apply the mullet metaphor to finance, specifically crypto.)
And the dimensions of this opportunity, from money movement to workflow automation, are pretty interesting. In Episode 5, Verto’s CEO Ola Oyetayo made the connection between enabling cross-border payments and managing tasks like account receivables. With Yele, we dig into how to dislodge cash within a value chain by automating transactions across it.
Tune in to hear about:
[2:08] - The basics of b2b payments
[15:50] - What Duplo does, how it started, and the size of the bizopps opportunity
[22:55] - Acquiring customers’ customers
[33:46] - Automating the key functions of a finance department
[42:10] - Duplo’s tech stack and business model[56:21] - Value chain integration/infiltration as moat
[1:02] - Counterintuitive first principle
Recommendations:
Chasing Outliers. Why Context Matters for Early Stage Investing in Africa, a report I co-authored on VC investing in AfricaConnect on social media:
Yele Oyekola on LinkedInDuplo on TwitterThe Trajectory Africa on LinkedInTayo Akinyemi on LinkedInTayo Akinyemi on Twitter -
On this special episode of The Trajectory Africa, we’re featuring “someone you should know”—David Ogundeko, Founder and Chief Vision Officer for Funema, a last-mile, impact-focused, alternative investment company.
David has spent the last 7 years creating a model to engineer and invest in problem solving, impact creating, high growth SMEs. In the process, he’s reimagining a VC model for Africa, and has built the operational muscle to back his claims.
In this conversation, we’ll learn how David’s challenging experiences as a founder spurred him to create a model that protects founders and their impact potential while still building big, profitable businesses.
The Trajectory Africa is helping David tell his story to support his bid to join the 11th cohort of VC Unlocked: Silicon Valley, 500 Global’s flagship investor education program. Help David get to Stanford in September by donating here.Tune in to hear about:
[3:07] - The dangers of faux expertise
[8:00] - Funema’s origin story
[11:39] - How Funema confronts extractive capitalism
[16:55] - Protecting founders’ equity in the context of a VC fund
[32:06] - Funema’s impact on its portfolio
[39:00] - Balancing mission and three paths to growth
[49:56] - Thoughts on talent
[1:00:27] - Finetuning how you communicate about your mission
[1:09:57] - Counterintuitive 1st principle
Recommendations:
David's LinkedIn post on original thinking.Chasing Outliers. Why Context Matters for Early Stage Investing in Africa, a report I co-authored on VC investing in AfricaConnect on social media:
Funema on LinkedInDavid Ogundeko on LinkedInThe Trajectory Africa on LinkedInTayo Akinyemi on LinkedInTayo Akinyemi on Twitter -
Пропущенные эпизоды?
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On this episode of The Trajectory Africa, we’re talking to Ola Oyetayo, Co-Founder and CEO of Verto, the first "all in one" cross-border payments platform for corporate treasuries in emerging markets. He’ll help us understand the mechanics of cross-border payments, why they're so expensive in Africa, how to improve price transparency and manage volatility, and how supporting cross-border payments evolves into accounts payable workflows.
We're picking up a theme that emerged in Episode 2, when Samora Kariuki highlighted intercontinental money movement as an “unlock” for the rest of the (digital) financial system. Similarly, Wiza Jalakasi from Episode 3 argued that money should move the way Africans and their business activities do—across borders. Finally, in the last episode with Sassoum Niang on building payments infrastructure, she emphasized that the tech isn’t the hardest part. It’s the financial operations—reconciliation, accounting system integration, and currency settlement.
So, we’re pulling on all those threads in this conversation with Ola.
Tune in to hear about:
[2:14] - Sharing Verto’s origin story during a product launch
[7:08] - The problems in cross-border payments that Verto solves
[11:53] - The role of price transparency and what causes volatility
[28:49] - How cross border payment facilitation evolves into supporting business operations
[49:37] - The business of moving money across borders
[56:17] - Counterintuitive first principle
Recommendations:
Chasing Outliers. Why Context Matters for Early Stage Investing in Africa, a report I co-authored on VC investing in Africa.Connect on social media:
Ola Oyetayo on LinkedInThe Trajectory Africa on LinkedInTayo Akinyemi on LinkedInTayo Akinyemi on Twitter -
On the previous episode of The Trajectory Africa, Wiza Jalakasi, Africa Market Development Director at EBANX suggested that infrastructure-building consumer payments businesses create value because of the sheer number of payment methods available, from mobile money to bank transfers and cards.
With all these options, businesses taking consumer payments need a neutral third party to provide a single point of aggregation. But what does it *actually* take to build this type of infrastructure? What are the mechanics behind aggregating and routing payments? Is tech the hardest part, or is it business, finance and operations? And how do you transition from aggregator to b2b super app? On this episode of The Trajectory Africa, we’re talking to Sassoum Niang, Director of Product & Marketing at InTouch about how you build pan-African “air traffic control” that allows businesses to collect payments in whatever form they come in.
Tune in to hear about:
[1:25] From film and e-commerce to payments at InTouch
[5:34] About InTouch and the problems it solves
[11:54] InTouch’s core infrastructure
[30:36] How partnerships help adapt to market and distribute strategically
[46:02] The business of infrastructure building
[51:00] Pressing problems remaining to be solved for payments to be functional
[1:05] Counterintuitive first principle for building a high growth payments infrastructure business
Recommendations:
Chasing Outliers. Why Context Matters for Early Stage Investing in Africa, a report I co-authored on VC investing in AfricaConnect on social media:
Sassoum Niang on LinkedInSassoum Niang on TwitterThe Trajectory Africa on LinkedInTayo Akinyemi on LinkedInTayo Akinyemi on Twitter -
On this episode of The Trajectory Africa, we’ll hear from Wiza Jalakasi, Director for Africa Market Development at EBanx, a payments processor headquartered in Brazil. He’ll shed some light on why building payment rails in Africa is deceptively hard work—from why some payment methods work better in some places than others to whether infrastructure-building or enabling payments through APIs is the best way to create value.
Tune in to hear about:
[5:41] Key milestones in payments infrastructure creation
[11:53] Why certain payment methods gain traction in different areas
[15:39] How consumer payments work and what the infrastructure looks like
[26:11] Back end infrastructure builders vs. API players
[33:30] VC leapfrogging logic vs. the path toward building a massive payments infrastructure business
[46:34] Similarities in payments problems across emerging markets[52:50] Pressing problems remaining to be solved for payments to be functional
[1:00] Counterintuitive first principle
Recommendations:
Wiza Jalakasi. Wiza’s website, including his writingFrontier Fintech, Samora Kariuki's newsletter, mentioned by WizaThe Hard Thing About Subscription Payments in Africa. The piece Wiza referenced in this episodeThe Subtext. A newsletter written by Osarumen Osamuyi, referenced by WizaChasing Outliers. Why Context Matters for Early Stage Investing in Africa, a report I co-authored on VC investing in AfricaConnect on social media:
Wiza Jalakasi on LinkedInWiza Jalakasi on TwitterThe Trajectory Africa on LinkedInTayo Akinyemi on LinkedInTayo Akinyemi on Twitter -
On this episode of The Trajectory Africa’s current series, "The Engine of African Venture: A Return to First Principles", we’re laying the foundation for a deeper exploration of fintech by stepping back to understand the system(s) that fintech creates and operates in. For that, we’re chatting with Samora Kariuki, Founder of the Frontier Fintech newsletter and Director at Sote, a company that’s building African supply chain infrastructure, about the goals and characteristics of Africa’s financial system(s).
Tune in to hear about:
[3:03] Why Samora launched Frontier Fintech newsletter and the benefits of “writing out loud”
[7:09] What problems fintech solves
[17:58] Characteristics of a functional financial system and the value it should deliver
[23:25] Why Africa's financial system needs technology and how it works in cash-driven, informal economies
[36:00] How much of Africa’s financial systems remain to be built
[47:05] What infrastructure layer will catalyze the rest of the system
[51:56] Consolidation vs. integration in fintech
[55:53] First principle for understanding what Africa’s digitally enabled financial system will look like
Recommendations:
Frontier Fintech, Samora’s newsletterThe anatomy of a fintech stack: enterprise businesses in South Africa, a hypothetical fintech stack for an established enterprise business in South AfricaChasing Outliers: Why Context Matters for Early Stage Investing in Africa, a report I co-authored on VC investing in AfricaConnect on social media:
Samora Kariuki on LinkedInSamora Kariuki on TwitterThe Trajectory Africa on LinkedInTayo Akinyemi on LinkedInTayo Akinyemi on Twitter -
This is the first episode of Part 1 of a new series on The Trajectory Africa —The Engine of African Venture, A Return to First Principles. This series will explore what powers fundamental value creation and investability in sectors that drive the bulk of African VC opportunities.
Part 1 is focused on fintech, and this episode with Abraham Augustine, Comms & Programs Lead for Norrsken, tackles the premise that digitalizing African economies is the African investment opportunity. Abraham shares his perspective on how digital Africa’s digital economy can actually be and how this impacts the way venture capital is invested.
Tune in to hear about:
[3:43] why Augustine authored a series on Africa's digital economy
[6:05] how Africa’s digital economy can defined and the venture-backable opportunity in digitalization
[18:40] the physical constraints of “digital” opportunities and investing for bytes vs. atoms
[30:20] market knowledge as a key to anti-fragility
[40:21] African unicorns hiding in the “crevices” of shifting markets
[55:00] the systems effects of digitalization in digital economies
[1:03] why momentum fails as a first principle for investing in Africa’s digital economy
Recommendations:
Next Wave: The social questions around Africa’s digital economy
Read Abraham’s writing on Africa’s digital economy on Tech Cabal:
The Next Wave: A data centre roadmap for Africa
The Next Wave: A digital economy is, above all, physical
The Next Wave: How Africa’s digital infrastructure gap manifests
The Next Wave: Africa’s power deficit is at odds with its digital economy goalsConnect on social media:
Abraham Augustine on LinkedInAbraham Augustine on TwitterThe Trajectory Africa on LinkedInTayo Akinyemi on LinkedInTayo Akinyemi on Twitter -
The Trajectory Africa’s second series, The Engine of African Venture: A Return to First Principles, is a two-part exploration of what powers fundamental value creation and investability in sectors that drive African VC opportunities. The first part is focused on fintech, starting from the premise that digitizing African economies is the African investment opportunity.
From this foundation, the series will explore fintech’s subsectors—from market opportunities to business models—to tease out why they are (or aren’t) destinations for venture capital.
For a recap of the previous series, check out The Trajectory Africa Rewind: Principles for Understanding African Venture.
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Welcome to Episode 5, the next to last of Dans les Coulisses, a series exploring VC and tech entrepreneurship in Francophone Africa, brought to you by Impact Hub Dakar and
The Trajectory Africa.For this episode, we have two guests: Birame Sock and Madji Sock.
Birame Sock is a technology expert with over 20 years of experience as a tech entrepreneur and high-level executive in the digital space. She recently founded Kwely, a B2B wholesale sourcing marketplace that showcases products made in Africa. Birame is also a co-founder of Haskè Ventures, a venture-builder and investment fund focused on high potential Francophone companies. She has served on several boards, including a publicly traded company valued at over a billion dollars, where she helped develop digital strategies for major entertainment brands such as American Idol. Birame is the jury president of the Francophone Africa region for the Cartier Women’s Initiative Award; serves on the jury of the Jack Ma Foundation’s Africa Business Heroes competition; and is an ambassador representing Francophone Africa for the UNCTAD eTrade for Women program.
Madji Sock is a seasoned entrepreneur and senior manager. She is a co-founder and President of Haskè Ventures, a venture-builder and investment fund focused on high potential Francophone companies. She launched a consulting firm in Senegal, which later expanded to three other West African countries. Madji has also co-founded the Women’s Investment Club Senegal, from which WIC Capital, a fund focused on women-owned businesses in Senegal and Côte d’Ivoire, emerged. In addition to co-founding an incubator in Dakar, she has launched, and currently manages, a chain of cafés. Madji has designed numerous programs and initiatives to strengthen the private sector, drive policy change, and build partnerships.
In this episode, we discuss:
Birame’s entrepreneurial crossroads and what motivated her to return to Senegal [2:02]Why Madji returned, her professional journey, and the launch of Haskè Ventures [4:45]What need Birame’s company Kweli was launched to to serve [9:00]Why venture building makes sense when startups have to build infrastructure [14:30]How to characterize the regional opportunity in Francophone Africa [33:00]The role of blended capital and M&A in funding and exiting African businesses [41:30]How African founders and investors should navigate “winter” in global VC [51:10] -
Welcome to Episode 4 of Dans les Coulisses, a series exploring VC and tech entrepreneurship in Francophone Africa, brought to you by Impact Hub Dakar and The Trajectory Africa.
This episode’s guest is Tijan Watt. Tijan is a Co-Founder and General Partner of Wuri Ventures, a pan-African venture capital fund focused on pre-seed and seed opportunities. Tijan has spent 20 years as an operator, building companies in Senegal and in the US, and as an investor, working in investment banking at Goldman Sachs, and private equity at Travant Capital Partners. Tijan graduated summa cum laude with a BA from Howard University in mathematics and computer science, and holds an MBA from Harvard University. Tijan writes about all things “business in Africa” at www.tijanwatt.com.
In this episode, we discuss:
Why demand is truly unlimited in Africa [1:54]Why rethinking a sector-centric thesis might be a good idea [9:02]Why the UEMOA zone has an underappreciated competitive advantage [13:43]How startups delivering public goods is a venture-scale opportunity [22:28]Why investing in the “real economy” unlocks $4 trillion in value [26:06]How to know if your investable trend has “legs” [28:22]Why affordability is the key to cracking “informal” markets [35:00]What drives capital flow into the UEMOA region [43:03] The bankability of soft power in Africa [51:32] -
Welcome to Episode 2 of Dans les Coulisses, a series exploring VC and tech entrepreneurship in Francophone Africa, brought to you by Impact Hub Dakar and The Trajectory Africa.
Impact Hub Dakar is a Dakar-based incubator that supports early stage startups in Senegal, with a mission to help investors meet scalable, early stage startups in Francophone Africa. The Trajectory Africa is a “pop-up” podcast exploring the trajectory, or pathway, of venture capital and startup formation in Africa.
This episode’s guest is Omar Cissé. Omar is the Founder and CEO of InTouch, a platform that is working to increase financial inclusion in Africa. The platform has 50,000+ TouchPoints across 14 countries, with more than 400 services available, generating more than 2 billion euros in transaction volume per year. In 2010, he launched CTIC Dakar, the first ICT incubator in Senegal, which he managed until 2013. Prior to CTIC, he co-founded 2SI, a company specializing in software engineering, which he led from 2005 to 2010.
Omar is also the co-founder of Teranga Capital, an investment fund he launched in collaboration with Investisseurs & Partenaires, an impact investment group dedicated to SMEs based in Sub-Saharan Africa and the Indian Ocean. He is an engineer by training, with a degree from the École Supérieure Polytechnique of Dakar and an MBA from the Institut Supérieur de Management.
In this episode, we discuss:
InTouch’s scale and expansion journey [2:12]VC opportunities in Francophone Africa and the importance of talent [8:52]Structure, challenges, and means to improve the Senegelese startup ecosystem [10:55]Investing category leaders, or industry “champions” [16:50]Signs of progress in the Senegalese startup ecosystem [23:31]Size, characteristics and constraints of Francophone markets [29:10]Sub-market differences in terms of regulation and talent [38:25]Problematic stereotypes about Francophone Africa [47:00]NOTES:
At 18:35, I meant to say “imported to domestically produced” instead of “domestically produced to imported”.At 24:40, CFA = FCFA.This episode was recorded in July of this year, which makes the comment at 46:08 about Sequoia Capital calling for sustainable growth, a bit ironic in the aftermath of FTX’s collapse. There’s also the question of whether African startups/to what extent African startups held to the profitability mentioned.
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Welcome to The Trajectory Africa: Rewind, the summary episode for the Trajectory Africa, a "pop-up" podcast series exploring the trajectory, or pathway, of venture capital and startup formation in Africa.
Over the course of 11 episodes, the series has explored: the key characteristics of African markets; the opportunities presented by digital commerce, SME financing and fintech, and how they power the broader venture opportunity; what drives fund performance in terms of economics and structure; how funds raise money; and how LPs make investment decisions.
The Rewind features key insights from the series, distilling them into six “principles” (or principles in training) that help explain the emerging logic behind VC opportunities in Africa.
In this episode, we break down these principles:
Now is the time for Africans to solve their own problems and build their own future.The future of African venture opportunities is digitizing African economies.African consumers may have limited purchasing power, but it’s possible to increase and enable consumption.Fintech is an important enabler for digitizing African economies because it provides foundational infrastructure. SMEs power tech startups by buying from them, and funding and supplying SMEs is a VC-scale opportunity.Africa-focused funds (as do most VCs), have an uphill battle to develop working business models.It also presents some thoughtful observations about the challenges faced by African (women) GPs as they raise funds, and what impact the impending global slowdown will have on African VC opportunities.
"Guest Artists" Featured in this Episode:
Abieyuwa Obaseki, Senior Associate, Stears DataAdenike Sheriff, Fund Operations, Future Africa | @AdenikeRaksBabacar Seck, Senior Investment Officer, Venture Capital & Private Equity, ProparcoBarbara Iyayi, CEO & Founding Partner, Unicorn Growth Capital | @barbara_iyayiDanai Musandu, Senior Investor Relations Associate, HPE Growth | @DanaiMusanduDotun Olowoporoku, Chief Commercial Officer, TeamApt | @DrDotunEghosa Omoigui, Managing General Partner, EchoVC | @EghosaOKuhle Mnisi Masilo, Associate, Transaction Management and Consulting, Roots of Impact Jake Kendall, Founder and Director, DFS Lab | @JakeKendall5Tony Chen, Partner, Verdant Frontiers | @tonyschenFeatured Resources and Recommended Track:
Chasing Outliers: Why Context Matters for Early Stage Investing in Africa (report)
https://kinyungu.com/chasing-outliers/Way Less Sad. AJR
https://www.youtube.com/watch?v=VlVhUbGa2pgDJ Saphir’s Spotify Playlist:
https://spoti.fi/2RS6hTc -
Welcome to Track 11 of The Trajectory Africa, a podcast series exploring the trajectory, or pathway, of venture capital and startup formation in Africa. This episode’s guest artist is Babacar Seck. Babacar is an investor passionate about projects that drive inclusive development, from education to healthcare and financial services. As a senior investment professional at Proparco, he focuses on designing and deploying a €200M venture capital program to fund and support African entrepreneurs while also managing a global investment portfolio of banks, insurance, and fintech.
Prior to Proparco, Babacar led key areas of strategy and development for AXA, a €1 trillion insurance firm, working under the Chairman and CEO. In his spare time, Babacar supports Africa-focused initiatives, as the Chair of the Sciences Po Alumni Africa Division, and as a member of Africultures and the Association of African Actuaries, respectively.
In this episode, the final one of the series, we discuss:
How Babacar started his career in venture capital and private equityProparco’s distinct characteristics as an LP and how it evaluates GPsHow DFIs’ ESG standards have benefitted African VCCommon mistakes that GPs make while fundraising and how the process works against themWhy African, women, and first-time GPs struggle to raise moneyWhat drives (African) fund underperformance and how LPs can helpWhat micro and macro factors will drive adjustments in the African VC spaceBabacar’s Recommendations & Featured Resources:
Proparco
https://www.proparco.fr/en
Spiritual. Burna Boy
https://www.youtube.com/watch?v=Coj0yQaItes
Chasing Outliers: Why Context Matters for Early Stage Investing in Africa (report)
https://kinyungu.com/chasing-outliers/DJ Saphir’s Spotify Playlist:
https://spoti.fi/2RS6hTc -
Welcome to Track 10 of The Trajectory Africa, a podcast series exploring the trajectory, or pathway, of venture capital and startup formation in Africa. This episode’s guest artist is Danai Musandu. Danai is a Senior Investor Relations Associate at HPE Growth, where she leads and supports the public and investor relations function, with a focus on fundraising and strategic communication.
Prior to HPE, Danai was an Investment and Investor Relations Associate at Goodwell Investments, an early-stage technology private equity firm focused on emerging markets and impact investing. Danai is an advisory board member of Private Equity International and the Africa Trust Group, and holds a BCom. in politics, philosophy and economics, as well as a postgraduate honors degree in Economics from the University of Cape Town.
In this episode, we discuss:
How Danai launched her career in venture capitalWhy she pivoted from investing to investor relationsThe fundraising process in investor relations (IR), and how it differs by LP typeWhat LPs look for when they evaluate fundsThe do’s and don’ts of raising moneyWhy deep listening and cultural multi-linguality are super powers for IR professionalsDanai’s Recommendations & Featured Resources:
HPE Growth
https://hpegrowth.com/
“It Is Not the Critic Who Counts”. Thomas Roosevelt
https://www.goodreads.com/quotes/7-it-is-not-the-critic-who-counts-not-the-man
Summer YoMuthi. Black Diamond
https://www.youtube.com/watch?v=AagjAUE8U8s&ab_channel=AmbitiouzEntertainmentChasing Outliers: Why Context Matters for Early Stage Investing in Africa (report)
https://kinyungu.com/chasing-outliers/DJ Saphir’s Spotify Playlist:
https://spoti.fi/2RS6hTc -
Welcome to Track 9 of The Trajectory Africa, a podcast series exploring the trajectory, or pathway, of venture capital and startup formation in Africa. This episode’s guest artist is Adenike Sheriff. Adenike is the Co-founder of Future Africa, a fund manager that invests early in mission driven founders solving hard problems for large markets. Prior to Future Africa, Adenike focused on content strategy and storytelling for technology companies in Africa and beyond. Her work has appeared in various international publications including the Huffington Post.
In this episode, we discuss:
How Adenike plotted an “unlikely” path into VCHow Future Africa came to be and why Adenike’s “blank slate” thinking inspired the birth of Future Africa CollectiveWhy market-creating innovations constitute a significant investment opportunityWhat thorny challenges can emerge while you’re innovatingWhat opportunities lie ahead for Future AfricaNote: This conversation was recorded in September 2021.
Adenike’s Recommendations & Featured Resources:
Future Africa
https://future.africa/
Future Africa podcast
https://future.africa/blog/category/podcast/
Christiansen, C., Ojomo, E., & Dillon, K. (2018). The Prosperity Paradox: How Innovations Can Lift Nations Out of Poverty.
https://www.christenseninstitute.org/books/the-prosperity-paradox-how-innovation-can-lift-nations-out-of-poverty/
Chimanada Ngozi Ndichie
https://www.chimamanda.com/Chasing Outliers: Why Context Matters for Early Stage Investing in Africa (report)
https://kinyungu.com/chasing-outliers/DJ Saphir’s Spotify Playlist:
https://spoti.fi/2RS6hTc -
Welcome to Track 8 of The Trajectory Africa, a podcast series exploring the trajectory, or pathway, of venture capital and startup formation in Africa. This episode’s guest artist is Eghosa Omoigui. Eghosa is the founder and Managing General Partner of EchoVC Partners, a seed and early-stage technology venture capital firm investing in underrepresented founders and underserved emerging markets. Prior to Echo, Eghosa worked for Intel, and in his last role served as the Director of Consumer Internet & Semantic Technologies for Intel Capital. A Kauffman Fellowship mentor, Eghosa is also engaged with organizations that support women founders and angel investors such as Astia, where he’s on the Venture Advisory Board, and Rising Tide Africa, where he’s a Board member. He attended law school at the University of Nigeria and University of Pennsylvania and business school at Babson College.
CORRECTION: In the intro to this episode, I erroneously referred to Eghosa as a Kauffman Fellow. He is a mentor for theKauffman Fellowship. Also, EchoVC is always EchoVC, not Echo.
NOTE: If you're struggling with the mental math featured in this episode, please see the FAQ with Eghosa at the bottom of the show notes. It should help to clarify the underlying logic.
Why EchoVC aspires to be the Sequoia Capital of emerging marketsWhy consumer market opportunities are tough to crackWhat it *actually* takes to return a $50M fund (Spoiler alert: It’s harder than you think.)Why valuation and ownership impact fund outcomes so significantlyWhy investing in women (among other things) is a key element of portfolio constructionA mini case study on hypothetical fintech company Moolah Mountain to explore how investing decisions impact fund economics
In this episode, we discuss:Eghosa’s Recommended Track & Featured Resources:
Waiting to Exhale (Original Soundtrack Album)
https://www.youtube.com/playlist?list=OLAK5uy_lLUDutopD_tC2JQt6m7FDQtoN6hXIFtp4
EchoVC Partners
https://www.echovc.com/
The meeting that showed me the truth about VCs. Tomer Dean
This is an easy to follow primer for understanding how exits affect fund performance.
https://techcrunch.com/2017/06/01/the-meeting-that-showed-me-the-truth-about-vcs/
What Informs an Investor’s Valuation of a Startup? Kolade Aderele
https://render.capital/blog/what-informs-an-investors-valuation-of-a-startup/
Thoughts on Y Combinator’s New Deal. A Perspective from Emerging Markets. Oo Nwoye
https://oonwoye.com/2022/01/12/thoughts-on-y-combinators-new-deal-a-perspective-from-emerging-markets/
Chasing Outliers: Why Context Matters for Early Stage Investing in Africa (report)
https://kinyungu.com/chasing-outliers/DJ Saphir’s Spotify Playlist:
https://spoti.fi/2RS6hTc
Why does it take $500M to 1X a $50M fund and $1.35-1.4B to 3x a $50M fund?
FAQ with Eghosa:Portfolio construction is the short answer. If you assume you own 10% of a startup at exit, then $500m of enterprise value created returns $50m. So it's not solely a scenario where a company in the portfolio exits at $500m, but what percentage you own at the exit. By the time you assume dilution, it gets harder to own 10% at exit.
2. Why does it take 10 Paystacks to return a $50M fund?
With Paystack, assume the exit multiple was 14.4x and assume you invested $1m into it. That is a $14.4m return sans dilution. You'd need to do that 10 times to return ~3x the fund.
This is not impossible but the assumptions about the entry price and the dilution that occur during the path to exit mean that the Paystack example is unusual. It raised just a Seed and a Series A prior to its $200m exit so the dilution was not material. Many companies may raise 3 or 4 times and that is where your starting ownership goes to die. I have seen quite a few Series Es and Fs. Series Gs and Hs exist.3. How do the outcomes change when you introduce failure rates?
A ten-year $50m Africa fund with a 2.5% fee and expenses may leave you ~$38m to actually invest but let's use $35m of investable capital to illustrate. Let's say your strategy is to invest $1m checks, and assume you reserve $10m to defend your pro rata in certain deals. FWIW, a 20% reserve ratio is on the low side and it's more common to see 30-50% of the fund set aside for reserves.
You make 25 investments (25 * $1m = $25m), and your avg postmoney entry valuation is $10m so you buy 10%. Then you apply your reserves to defend your pro rata at the A (which are usually $15m+ rounds) so your check size is say, $1.5m. That means you can do ~6 follow-ons to protect your initial 10% holding.
If all 6 exit after that point so they don't raise again (almost statistically impossible), then you hold 10% of the aggregate exit value. You would have invested $2.5m ($1m initial check plus a $1.5m follow on) into each of the 6. Assuming they are all Paystack type exits at $200m (sure, everyone thinks they will be unicorns but actual exit data belies that) then your gross return from the 6 companies is $120m (10% * $200m per company * 6 companies).
But remember we started off by investing in 25 companies.
If 50% fail to return 1x or better, (remember that batting .300 (3 in 10) in major league baseball likely gets you in the hall of fame) then we are looking at ~13 companies to drive the fund returns. Of these 13, 6 based on our example will return $120m. Maybe the remaining 7, representing $7m of investments return 3x (unlikely but let's say so just for shits and giggles). Then the aggregate fund return is $120m + $21m = $141m.
On first read, that's a smashing success for a $50m fund and delivers the 20% carry (profit share) to the manager.
Here are some quick calculations to illustrate the return multiples.
$141m: dollars returned.
$35m: dollars invested by the GP.
$50m: dollars invested by LPs.
$141m/$35m = 4.02x $-at-work gross;
$141m/$50m = 2.82x trued up gross;
$141m - $50m [$91m] * 80% [$72.8m] + $50m [$122.8m] ÷ $50m = 2.45x net to LPs.
This example of course assumes no recycling i.e. the GP taking interim returns from early exits and reinvesting so that (s)he can get to invest the full $50m and not the $35m after fees. Doing so improves the odds for the fund as more dollars are working via startups and not just underwriting fees and expenses...
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Barbara Iyayi is an entrepreneur and investor with over 16 years of experience in venture capital, growth equity, and financial services. She has founded, invested in, scaled and advised, fintech and financial services companies globally. Currently, Barbara is the CEO & Founding Partner of Unicorn Growth Capital, an early-stage VC firm investing in the future of fintech. She also sits on the board of the World Wide Web Foundation.
Prior to launching Unicorn, she was the Chief Growth Officer and Managing Director for Africa of Element, a pioneer of mobile deep learning, and served as the Board Chair of Appzone, a fintech infrastructure platform enabling the delivery of digital financial services in Africa. Barbara was a member of the founding team of Atlas Mara, Africa’s first SPAC, and conducted $15 billion in global transactions for JPMorgan and UBS. Barbara received a Bachelor of Science degree in Electrical Engineering and Computer Science from Columbia University, and an MBA from Harvard Business School.
In this episode, we discuss:
Why Barbara believes that African fintech is a lucrative investment opportunity How fintech will help digitize the transactions of Africa's consumers and businesses, and catalyze its digital economy How Barbara leveraged her understanding of the fintech opportunity to overcome bias and raise her first fundWhat LPs get wrong about investing in new fund managers and African venture
My Life. Mary J. Blige
Barbara’s Recommended Track & Featured Resources:
https://www.youtube.com/watch?v=D0eF8P177fA&list=OLAK5uy_mUVX4_2ajHRsfFeTLdtWZd78OqUwLMzm8Unicorn Growth Capital
https://www.unicorngrowthcap.com/Invest in African Investors: A long-term solution to funding underrepresented local African founders. Nacho Nwana
https://nwanacho.medium.com/invest-in-african-investors-a-long-term-solution-to-funding-underrepresented-local-african-c9c8ca1a61ffBest Of: This Conversation Will Change How You Think About Thinking. Ezra Klein Show. (per the mention of intuition in investing)
https://podcasts.apple.com/us/podcast/best-of-this-conversation-will-change-how-you-think/id1548604447?i=1000546869257Chasing Outliers: Why Context Matters for Early Stage Investing in Africa. Tayo Akinyemi, Osarumen Osamuyi, and Tony Chen. (report)
https://kinyungu.com/chasing-outliers/DJ Saphir’s Spotify Playlist:
https://spoti.fi/2RS6hTc -
Welcome to Track 6 of The Trajectory Africa, a podcast series exploring the trajectory, or pathway, of venture capital and startup formation in Africa. This episode’s guest artist is Hilda Moraa. Hilda is the Founder & CEO of Pezesha, a holistic digital financial infrastructure powering embedded finance to SMEs and institutions across Africa. She is an award-winning entrepreneur and author, who has more than 10 years of experience in fintech, regulation, and working with supply chain-driven multinationals such as Coca-Cola. Prior to launching Pezesha, she founded WezaTele, a Kenyan fintech startup that was acquired in 2015. Hilda has been named a Top 30 African Innovator by Quartz Africa, and an Obama Foundation Leader. Picking up on the previous conversation with Kuhle Mnisi of Secha Capital about the interplay between tech-enabled SMEs and tech startups, I chat to Hilda about how she’s building a tech company that’s creating an (eco)system of tech products to connect SME borrowers to capital.
In this episode, we discuss:
Hilda’s entrepreneurial journey, and what problem she’s solving with PezeshaWhy providing credit to SMEs is important and presents a valuable opportunity What constitutes key elements of Pezesha’s lending infrastructure and business modelHow being a systems-builder impacts Pezesha’s trajectory, and what constitutes key enablers for systems-building businessesHilda’s Recommended Track & Featured Resources:
Rain. Yemi Alade
https://www.youtube.com/watch?v=ERMoAHnf2VwPezesha
https://www.sechacapital.com/
A Kenyan Startup Journey: My 10 Key Lessons. Hilda Moraa
https://hildamorara.com/index.php/buy-my-book/Chasing Outliers: Why Context Matters for Early Stage Investing in Africa (report)
https://kinyungu.com/chasing-outliers/DJ Saphir’s Spotify Playlist:
https://spoti.fi/2RS6hTc -
Welcome to Track 5 of The Trajectory Africa, a podcast series exploring the trajectory, or pathway, of venture capital and startup formation in Africa. This episode’s guest artist is Kuhle Mnisi. Kuhle is a Principal at Secha Capital, which she joined to marry her finance skill with a deep passion for impact. Prior to joining Secha, Kuhle worked as an Assistant Lecturer at the University of Cape Town, and interned with Act in Africa, a design thinking and entrepreneurship development program, as well as Goldman Sachs in investment banking and PwC in auditing. In this conversation, Kuhle and I explore the SME investment opportunity, how it’s similar to and different from tech, and the ways in which tech-enabled SMEs and tech ventures play complementary roles in the broader venture ecosystem in Africa.
In this episode, we discuss:
Why Kuhle joined Secha Capital, a patient capital holding company that invests in African SMEs looking to growSecha's mission and approach: how it defines SMEs and why they present robust investment opportunitiesWhy it’s important for SMEs to adopt technology How SMEs and tech startups are connected, and how SMEs fuel tech startup growthKuhle's Recommended Track & Featured Resources:
Konke. (I Want It All.) Seba Kaapstad
https://www.youtube.com/watch?v=DaHZSn8UgYgSecha Capital
https://www.sechacapital.com/
An Arsenal of Operator-Investors for Africa (article)
https://ssir.org/articles/entry/an_arsenal_of_operator_investors_for_africa
Chasing Outliers: Why Context Matters for Early Stage Investing in Africa (report)
https://kinyungu.com/chasing-outliers/DJ Saphir’s Spotify Playlist:
https://spoti.fi/2RS6hTc -
Welcome to Track 4 of The Trajectory Africa, a podcast series exploring the trajectory, or pathway, of venture capital and startup formation in Africa. This episode’s guest artist is Abieyuwa Obaseki, a consultant at Stears Data, a division of Stears Business. Stears’ mission is to make it easy for anyone anywhere in the world to access high quality information and data on Africa. Abieyuwa currently focuses on delivering insights to, for, and about Nigeria’s technology and innovation ecosystems. Prior to Stears, she was a strategy consultant, advising clients in the UK across multiple sectors such as banking, telecoms, and consumer goods.
In this episode, we discuss:
How Stears Nigeria came to be, and why it aspires to be the “Bloomberg of Africa”The “proper” size of consumer and b2b markets in Nigeria Key indicators of consumption readiness for Nigerian consumersWhat enables consumption in Nigeria How fintech enables business, consumption, and financial inclusionAbieyuwa’s Recommended Track & Featured Resources:
One Step at a Time. Jordan Sparks
https://www.youtube.com/watch?v=PIE5QtkxzvMStears Business
https://www.stearsng.com/Chasing Outliers: Why Context Matters for Early Stage Investing in Africa.
https://kinyungu.com/chasing-outliers/DJ Saphir’s Spotify Playlist:
https://spoti.fi/2RS6hTc - Показать больше
